Update: Flipkart writes in to explain why they’ve made this change:
“The decision to exclude the wallet for physical product purchases is due to the following reasons:

– This is a temporary change until we get the required government approvals to run a marketplace wide wallet

– The Flyte wallet will continue as a closed loop wallet only for digital purchases

– Running a single seller wallet on the marketplace would have led to a bad customer experience – given our aggressive plans to scale up the number of sellers in the future.”

Update: It appears that Flipkart’s marketplace is live, but we can’t be too certain. On all product pages, we found that a clear mention of what are called “sellers”. The only thing is that for every product that we looked up – see watches, games, music, toasters, movies, books, the seller was a company called WS Retail, which was believed to be a part of the Flipkart group, before a restructuring took place. It is believed that Rajeev Kuchhal bought WS Retail earlier this year.

Deepak Abbot informs us that Flipkart has multiple sellers in the computer accessories and gadget categories:

Earlier: Online shopping major Flipkart.com has restricted its users from using new wallet top-ups to transactions on Flyte, its digital goods store, an email it sent to its wallet users indicates. (see below; Hat tip: @anupamsaxena) Flyte sells only mp3’s and ebooks as of now, and this might help boost Flyte sales and get users accustomed to making ebook and digital music purchases.

We’re expecting Flipkart to announce the launch of its Marketplace shortly. Remember that, as we had reported earlier, Flipkart was looking at a marketplace model, and had begun recruiting merchants in order to comply with India’s short sighted multi-brand retail regime. Now other merchants on Flipkart will sell goods on Flipkart, and because the Flipkart Wallet is a closed wallet, it cannot be used to pay merchants directly, and is valid for Flipkart-only. This was explained on Twitter by Paytm founder Vijay Shekhar Sharma:

@anupamsaxena ==> all items are now sold by different merchants not FK. So FK can’t use close wallet to pay other merchants. @nixxin

We wonder how Flipkart is managing the payments to merchants from the current balance on its wallet, and whether, going forward, customers will be able to choose between adding amount to wallet or a refund, in case of unsuccessful purchases (bank payment gateways in India suck).

Why Flyte Only?

The fact that top-ups are being used on Flyte only indicates that Flipkart is itself selling ebooks and music online, which is multi-brand retail. It is entirely possible that this marks the integration of a marketplace model, and not really a complete switch to a marketplace model, wherein Flipkart doesn’t retail any goods (physical or digital) by itself. I guess it would be difficult to explain to users why they can use the wallet for purchasing some physical goods from Flipkart using the wallet and not others, whereas, it’s easier to indicate that the wallet can be used for Flyte only. From a customer experience perspective – which is something that Flipkart has always emphasized – this is a tricky thing to do. On a brighter note, more people will buy digital goods, even if forced.

We’ve asked Flipkart for a clarification on why they’ve implemented this policy, and will update in case we hear from them.